[2023] UKUT 132 (AAC)

I shall deal first with the question whether domestic law (leaving Article 6 of the Convention out of account) requires the criminal standard of proof to be adopted in MPN proceedings before the First-tier Tribunal. I shall then consider the parties’ arguments under the Human Rights Act 1998 and European Convention on Human Rights.

Lord Hoffman identified, in re B a category of proceedings which, despite their formal classification as civil, should apply the criminal standard of proof, or something like it, to determine disputed matters of fact. These are proceedings which are ‘so serious’ that it is appropriate to apply the criminal standard. That describes a category but does not really elucidate its contents. However, some light is shed by the two cases which Lord Hoffman identified as falling within this category. B v Chief Constable of Avon and Somerset Constabulary [2001] 1 WLR 340 concerned the making of a sex offender order by a magistrates’ court. It was a decision of the High Court, but judgment was given by the then Lord Chief Justice, Lord Woolf. His Lordship, at [41], said that the standard of proof to be applied, for the purposes of determining under section 2(1)(a) of the Crime and Disorder Act 1998 whether a person was a sex offender, would “for all practical purposes be indistinguishable from the criminal standard”. As Lord Hoffman observed, at [8], such orders “may impose restrictions upon the person’s freedom of movement and activity”. The other case mentioned by Lord Hoffman was the decision of the Judicial Committee of the House of Lords in R (McCann v Crown Court at Manchester) [2003] 1 AC 787. This concerned anti-social behaviour orders which, again, may restrict a person’s freedom of movement and activity.

I note that the cases referred to by Lord Hoffman shared two characteristics. Firstly, they both involved orders that place restrictions on an individual’s freedom of movement and activity. Secondly, breach of the terms of either order would constitute a criminal offence. While Lord Hoffman did not say so in terms, in my view these cases provide some indication of the ‘serious consequences’ necessary under domestic law for the criminal standard of proof to be required in civil proceedings.

Decisions of the Upper Tribunal’s Tax and Chancery Chamber have sought to illuminate the ‘serious consequences’ category identified by Lord Hoffman. Khawaja held that the fact that an allegation is serious and has serious consequences for an individual, including a substantial financial penalty, is not necessarily sufficient. Hackett held that the heightened standard was not called for simply because a matter involved a serious fraud with a large penalty nor because it involved an allegation of dishonesty. Hannam held that serious financial and reputational consequences of a penalty were not, of themselves, sufficient. Hannam also gave some indication of cases that might fall within Lord Hoffman’s category namely where a person’s fundamental liberties were at risk which it contrasted with a person only whose livelihood was at risk.

The Appellant argues that it has long been a characteristic of our common law for civil monetary penalties to be categorised as penal sanctions. However, the authority relied on, Tuck v Priester, which dates back to 1887, is not, in my view, authority for the proposition advanced. In R v Z (Northern Ireland) [2005] UKHL 35, at [16], the Judicial Committee of the House of Lords described Tuck v Priester as authority for the proposition that “a person should not be penalised except under a clear law, should not (as it is sometimes said) be put in peril on an ambiguity”. That is not the same thing at all as the proposition that civil monetary penalties should be categorised and treated as penal sanctions. If our common law had a characteristic of the type argued for by the Appellant, and had done so since 1887, I would have expected clear supporting case law authorities, but none are cited.

The Appellant also argues that, if the common law regards a penalty as a penal sanction, it ‘defaults’ to certain protections which include the criminal standard of proof in proceedings challenging the penalty. Again, supporting case law authorities are conspicuous by their absence from the Appellant’s submissions. The only case cited is the Court of Appeal’s decision in Rowe. However, in Rowe the Court was clearly influenced by the relevant statutory language which referred to a person being “guilty” of corrupt electoral practice which, as the Court remarked, “connotes a criminal offence”.

In my judgment, the cases referred to by Lord Hoffman as instances of civil proceedings in which the criminal standard of proof should be applied are a guide to what he meant by the ‘serious consequences’ of proceedings. Civil proceedings are more likely to satisfy the test where they may result in individual freedoms being restricted by some measure breach of which would be a criminal offence. In my judgment, there is a categorical difference between that type of case and those involving imposition of a penalty for conduct which is not itself a criminal offence. While paying the penalty may have serious financial implications for the penalised person, the penalty leaves the person’s freedom of action untouched. It might possibly be different if legislation required a penalty that inevitably caused, or came close to, a complete deprivation of a person’s assets but this is not the case for a MPN.

While the Upper Tribunal authorities mentioned above are not binding on me, I find their reasoning persuasive. I consider them to be consistent with the category described by Lord Hoffman in re B and the two cases which his Lordship identified as exemplifying that category. I therefore find that our domestic law does not require the Tribunal, in MPN proceedings, to resolve disputed matters of fact according to the criminal standard of proof. A MPN may impose a very significant penalty but, of itself, that is not sufficient to bring MPN proceedings within the ‘serious consequences’ category identified by Lord Hoffman.

The Appellant advances numerous arguments why MPN proceedings fall within the ‘serious consequences’ category identified by Lord Hoffman and/or is an essentially punitive measure. However, I find none of them persuasive:

almost inevitably, there is a punitive aspect to any measure styled as a ‘penalty’ (the measure would probably be described by the legislature as some kind of compensatory or restitutionary order if no punitive effect was intended). The element of punishment arises because the penalised person suffers a financial loss that is not in proportion to any financial benefit gained or any financial detriment visited upon another. There is clearly also a dissuasive aspect to MPNs. I do not think it can sensibly be disputed that, in general, the prospect of significant financial penalties for breach of data protection requirements makes a controller or processor more likely to eschew a lackadaisical approach to data protection compliance and less likely to take deliberate action in breach of data protection requirements. I do not accept the argument that the character of a MPN is essentially punitive. The MPN is part of a scheme for promoting compliance with data protection requirements and cannot be considered essentially punitive or penal in character;

I am not convinced that the criteria used to fix the amount of a MPN ‘mimic’ those applied by the criminal courts in determining the amount of a fine for a criminal offence. There may be some similarities such as some regard being had to a person’s ability to pay and a positive relationship between severity of misconduct and penalty amount but that is only to expected. In relation to the latter point, it is obvious that a positive relationship between penalty amount and severity of misconduct is far more likely to promote regulatory compliance than a regulatory scheme which makes no such link;

the Appellant argues that the potential amount of a MPN may easily put an end to a business and it is not disputed that the DPA 2018 permits the Commissioner to impose very significant or, in the Appellant’s words, ‘enormous’ financial penalties. However, the penalty rules provide for a normal maximum penalty and penalties in excess of this are constrained by reference to a formula that takes account of the financial size of a business undertaking. I also note that, in this case, the Commissioner agreed to a significant reduction in penalty amount in the light of the Appellant’s pre-MPN representations. If I were satisfied that a MPN would almost inevitably spell financial Armageddon for the penalised person, I might be persuaded that the MPN is essentially punitive in character. However, I am not so satisfied;

I do not agree that a data subject’s separate right to seek compensation under the DPA 2018 means that the MPN’s purpose is purely punitive. Whether or not a data subject will exercise the right to seek compensation in any particular case is unknowable which means it is uncertain whether the existence of the right to compensation will, to any meaningful extent, act to restrain non-compliant behaviour. The data subject’s right to seek compensation under the DPA 2018 does not therefore dilute the regulatory character of the MPN to any meaningful degree; it does not render the MPN an essentially punitive measure;